When the house is paid off... then what?

[SenoraE]

We have just over a year left to pay off our house. We're hoping to cut that down to a little under a year, depending on what we get back from taxes this year. We currently pay just under $1000/month for our regular mortgage payment (which includes taxes and insurance). I am going to budget $500 / month for taxes and insurance after we pay off the house because we will no longer have escrow taking care of those for us. We have been paying an additional $2,000 / month minimum and keeping a $0 balance budget where every extra cent at the end of the month goes into the mortgage pay off e-check. In a year I have no idea what to do. I know we can put MORE into retirement, and MORE into college funds for the boys, but I feel like we've been thrifty for so long that I'm not going to be able to adjust my mind into now it's ok to take a $5k vacation. What are your plans when your house is paid off? Or for those lucky ducks who already paid off your house - how was your transition to a debt free life? I just feel like it can't be as easy as it sounds!

[MamaJules]

If you have that much extra money each month, then once your house is paid off you can do absolutely whatever you want! I can't imagine ever being in that position (we are 3 years into a 30 year mortgage, and are not able to pay any above the monthly payment, so it's going to be a long time!) I would say to start thinking about your priorities/wants now. Have you been putting off contributing to your retirment, or putting in less than you should, in order to pay off your mortgage? If so, I would start socking away the maximum amount there as soon as the mortgage is gone. Other than that, travel would be a big one for me.

[AmberP]

ITA, retirement and college are GREAT places to put the extra. It will take a while to get in the mindset that taking a vacation is okay, but you totally deserve it. That is such a fantastic place to be! <3

:cheers:

[Tris]

If you are already paying into retirement/ college fund, I would totally put the 2k+ into a savings acct and take a kick butt vacation after a few months. Treat yourselves a bit, yolo and all

[cmarsh31]

In addition to to property taxes and insurance, how does it affect your federal & state taxes? If we didn't have our mortgage interest to deduct, I know we'd end up paying a LOT each year (heck, before we bought our first house, when we were making combined less than half of what DH makes now, we had to pay). Make sure you look into that if it's an issue so you have the amount you need saved up!

Congrats!!!!

[SenoraE]

Originally Posted by MamaJules If you have that much extra money each month, then once your house is paid off you can do absolutely whatever you want! I can't imagine ever being in that position (we are 3 years into a 30 year mortgage, and are not able to pay any above the monthly payment, so it's going to be a long time!) I would say to start thinking about your priorities/wants now. Have you been putting off contributing to your retirment, or putting in less than you should, in order to pay off your mortgage? If so, I would start socking away the maximum amount there as soon as the mortgage is gone. Other than that, travel would be a big one for me.

DH and I both have around $50k in retirement each, plus I have a pension coming (if the state holds out that long). I guess I didn't realize how well we have managed our money (we are in our early 30's). We are both lucky to have good jobs, even in this crazy economy, and we NEVER buy anything new, shop at Aldi's, coupon at drug stores, etc, so we have tried not to take our income for granted. My parents will leave us a very large inheritance, but I really want to be able to match that for our boys, so a conservative lifestyle is where it's been at for us! I can't imagine splurging... I am getting scared!

[SenoraE]

Originally Posted by cmarsh31 In addition to to property taxes and insurance, how does it affect your federal & state taxes? If we didn't have our mortgage interest to deduct, I know we'd end up paying a LOT each year (heck, before we bought our first house, when we were making combined less than half of what DH makes now, we had to pay). Make sure you look into that if it's an issue so you have the amount you need saved up! Congrats!!!!

Thank you for this thought!! I will ask our tax guy this year how it would impact us if we had $0 interest to deduct. I know this year it was $5k+ on the mortgage tax paperwork that came through. We already have 0 deductions, but perhaps we can add to the amount getting taken out for the following year... maybe even $25 each per pay, which would be $100 / month would help!

[bluecandi]

Set back 15% for retirement. And if you dont already have it, you should save at least 6 months of expenses. Start or complete the college funds too. If home improvements are needed, now is the time. If you are ready for a vehicle upgrade or repair, go for it!!

Congratulations!! Thats so awesome! I wish we were there too but it wont be long. God willing we will make a huge dent in our debt this year.

[cmarsh31]

Originally Posted by SenoraE Thank you for this thought!! I will ask our tax guy this year how it would impact us if we had $0 interest to deduct. I know this year it was $5k+ on the mortgage tax paperwork that came through. We already have 0 deductions, but perhaps we can add to the amount getting taken out for the following year... maybe even $25 each per pay, which would be $100 / month would help!

I don't even what to think what we had to deduct this year... (I did our taxes so I know, but it's HUGE because we just bought this house last year ) but that was the thought I've been having reading all these threads about paying off houses - yes, we're paying interest but we don't even get a child tax credit, it's literally our only deduction.

I'm with you on the pension - here's to hoping the NYS Teachers retirement pension holds up too! (also NOT depending on it )

[SenoraE]

Originally Posted by cmarsh31 I don't even what to think what we had to deduct this year... (I did our taxes so I know, but it's HUGE because we just bought this house last year ) but that was the thought I've been having reading all these threads about paying off houses - yes, we're paying interest but we don't even get a child tax credit, it's literally our only deduction. I'm with you on the pension - here's to hoping the NYS Teachers retirement pension holds up too! (also NOT depending on it )

That's my retirement group too!!! Yeah for teachers!!! Are you upstate or downstate?